Google In 2015 Case Study: Strategic Problems Facing Google

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Google in 2015 Case Study
Introduction
Established on September 7th 1998, Google has grown to become one of most profitable organizations in the world.Since its inception, thecompany has formulated business strategies that promote its products while maintaining high levels of revenue and market share. Using the 2015 case study provided by Charles and Hill, one can paint a clear picture of Google’s strategies and competitive advantage. Therefore, this paper seeks to provide the following; a summary of the case study, description of the major strategic issues facing the company, analysis of the company’s strength, weakness, opportunity, and threats using porters five force model, and recommendations towards the company’s strategies.
Summary of the case study
The case study reports that in 2014, 67% of internet searches in the United States were conducted through Google. The closest competitors were Microsoft and Yahoo who were so far behind with 19.6% and 10.2% respectively. Due to its superior position, the company has established a monopolistic market in many countries. For instance, in Europe, its market share is more than 95%. Consequently, in 2014, Google had revenues of $66 billion and a net income of $14.4 billion. The high revenues are because the company auctions search keywords to advertisers. Google then receives payment from the advertisers every time someone clicks on a link that directs them to their site. Other than just Google the search engine, the company owns Gmail, Google Maps, Play store, DoubleClick, and Android operating system. Google’s main competitors are Microsoft and Yahoo. However, through its flat organization structure, the company has been able to keep at bay.
Strategic problems facing Google
One issue that is evident from the case study is the huge expenses incurred when Google adds additional products to itsportfolio. For instance, from its search engines, Google makes a profit margin of 60%.When the company inserted advertisements on other webpages, the profit margin rose only by 10%. The low returns in this situation can be explained by the principle of diminishing returns. It is harder for Google to make search results more relevant than the way they already are. Therefore, the funds used to implement this strategy are more than what is realized at the end.In addition, the vigorous strategies adopted by the competitors are a big problem for Google. Microsoft and Yahoo entered into an agreement, where Bing will be the default search engine for Yahoo. On the other hand, Yah...